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High Court Of Calcutta
Dipak Kumar Sen, , Shymal Kumar Sen
SWAPAN DASGUPTA - Appellant
Versus
NAVIN CHAND SUCHANTI - Respondent
Appeal Nil And Suit No. 5 Of 1987
Decided On : 01/12/1988
DIRECTOR - APPOINTMENT - RETIREMENT - PRIVATE COMPANY - ARTICLES OF ASSOCIATION - APPOINTEE BY ARTICLES - CONTINUED AS DIRECTOR - ARTICLES SILENT AS TO TERM OF OFFICE - NO RETIREMENT TILL NEXT GENERAL MEETING - COMPANY BECAME PUBLIC COMPANY - RETIREMENT AT NEXT ANNUAL GENERAL MEETING - INTERIM INJUNCTION AGAINST DIRECTOR - NOT MAINTAINABLE.
Fact of the Case:
The appellant was appointed as a director of two private companies by their respective articles of association. The companies were later amalgamated and the appellant continued as a director of the amalgamated company, which later became a public company. The appellant was appointed as the managing director of the amalgamated company for a period of five years, and under the articles of association, he was not liable to retire from his office as a director as long as he continued to hold the post of managing director. After the termination of his office as managing director, the appellant continued to act as a director of the company. A shareholder of the company filed a suit against the appellant and others, claiming, inter alia, a declaration that the appellant was never appointed as a director of the company and that he was not entitled to act as a director. The shareholder also filed an application for an interim injunction restraining the appellant from acting as a director of the company. The trial court granted the interim injunction.
Finding of the Court:
The Calcutta High Court held that the appellant was prima facie a director of the company and was entitled to act as such. The court held that the appellant was appointed as a director of the private companies by their respective articles of association under Section 255 of the Companies Act, 1956, and continued in his office as a director after the companies were amalgamated. The court held that the amalgamated company continued as a private company till November 4, 1981, and that there was no question of retirement of the appellant from his office as a director or such office coming to an end. The court also held that the appellant continued to be a director of the company which had become a public company by November 4, 1981, and was liable to be retired at the next annual general meeting scheduled to be held on December 29, 1986. The court further held that the question of retirement of the appellant would only arise at the adjourned date of the said annual general meeting of the company when the said meeting is held and not before that. The court also held that the interim injunction against the appellant was not maintainable.
Issues: 1. Whether the appellant was a director of the company? 2. Whether the appellant was entitled to act as a director of the company? 3. Whether the interim injunction against the appellant was maintainable?
Ratio Decidendi: 1. The appellant was appointed as a director of the private companies by their respective articles of association under Section 255 of the Companies Act, 1956, and continued in his office as a director after the companies were amalgamated. 2. The amalgamated company continued as a private company till November 4, 1981, and there was no question of retirement of the appellant from his office as a director or such office coming to an end. 3. The appellant continued to be a director of the company which had become a public company by November 4, 1981, and was liable to be retired at the next annual general meeting scheduled to be held on December 29, 1986. 4. The question of retirement of the appellant would only arise at the adjourned date of the said annual general meeting of the company when the said meeting is held and not before that.
Final Decision: The appeal was allowed. The judgment and order dated November 19, 1987, were set aside so far as the appellant was concerned.
( 1 ) THE material facts on record and the proceedings leading up to this appeal are, inter alia, that Sinclair Freight and Chartering Consultants P. Ltd. (hereinafter referred to as " the freight company ") was incorporated under the Companies Act, 1956, on June 20, 1968. Swapan Dasgupta, the appellant, was a subscriber to the memorandum of the freight company and under Article 11 of the articles of association of the freight company, the appellant became and was named as one of its first directors. The appellant was also appointed a managing director of the freight company and continued as such till the time as hereinafter stated.
( 2 ) ON December 2, 1971, Sinclair Hotels P. Ltd. (hereinafter referred to as " the hotels company ") was incorporated under the Companies Act, 1956. The appellant was also one of the subscribers to the memorandum of the hotels company and under Article 11 of the articles of association of the hotels company, the appellant became and was named as one of the first directors thereof.
( 3 ) ON July 14, 1978, a scheme of amalgamation was approved and sanctioned by this court in Company Petition No. 196 of 1978 connected with Company Application No. 39 of 1978 whereby the business and undertaking including all property, assets and liabilities of the freight company was directed to be transferred and vested in the hotels company on the terms and conditions of the said scheme. After such transfer and vesting, the freight company was directed to be dissolved.
( 4 ) IT was provided in the said scheme that the hotels company would take over the services of the existing managing director of the freight company, i. e. , the appellant, on the same terms and conditions.
( 5 ) THE name of the hotels company was subsequently altered to Sinclairs Hotels and Transportation P. Ltd.
( 6 ) SUBSEQUENT to the amalgamation, the appellant continued as a managing director of the hotels company. On May 1, 1981, the appellant was reappointed as the managing director of the hotels company for a period of five years. On November 4, 1981, the hotels company was converted into a public limited company and named as Sinclairs Hotels and Transportation Ltd. , hereinafter referred to as "the said company".
( 7 ) THE appointment of the appellant as the managing director of the said company was approved by the Central Government by its letters dated September 13, 1982, and May 17, 1983.
( 8 ) AT an extraordinary general meeting of the shareholders of the said company held on January 11, 1983, the appointment of the appellant as the managing director for five years was approved with effect from May 1, 1981.
( 9 ) ON April 30, 1986, the appellant ceased to be the managing director of the said company but continued to act as a director and the chairman of the board of directors thereof.
( 10 ) ON August 16, 1986, there was a meeting of the board of directors of the said company which was presided over by the appellant. At this meeting, a committee of management was constituted with the appellant as the chairman. Certain additional duties in respect of the affairs of the said company were allotted to the appellant and it was decided to issue a power of attorney in his favour. It was recorded in the minutes of its meeting, inter alia, that the appointment of the appellant as the chairman-director of the said company had been and was thereby reaffirmed until the next annual general meeting of the said company. In the return of the said company filed with the Registrar of Companies on September 8, 1986, it was recorded that the appellant had been appointed the chairman-director and the constituted attorney of the said company on August 16, 1986.
( 11 ) ON November 24, 1986, a notice was issued convening the annual general meeting of the said company to be held on December 29, 1986. Under item No. 6 of the agenda, an ordinary resolution was proposed to be passed that the appellant be appointed as a directo
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